In the wake of recent provocations stemming from US President Donald Trump's comments regarding Greenland, the European Union is actively developing strategic financial tools intended to counterbalance such external pressures. As a predominantly trade-oriented entity, the EU's response focuses on economic measures, including the imposition of substantial tariffs on US imports and deployment of a broad range of trade restrictions encapsulated by the so-called 'trade bazooka,' a term popularized by French President Emmanuel Macron. Despite this apparent readiness, a majority of the 27 EU member countries maintain reservations about fully engaging this mechanism.
The 'trade bazooka' is essentially a nickname for the EU's Anti-Coercion Instrument (ACI), a comprehensive package of measures authorized by the European Commission. This instrument empowers the bloc to take counteractions against countries exerting undue economic or political pressure on EU states or their corporate entities. Among the possible responses under the ACI are controlling or outright banning imports and exports of goods and services, excluding certain countries or firms from participation in EU public procurement processes, and restricting foreign direct investment where necessary. At its most stringent level, the ACI has the capability to sever access to the EU's extensive market, which comprises approximately 450 million consumers.
Understanding the scope of this tool is critical, as its deployment could usher in substantial financial ramifications, potentially resulting in billions of dollars in losses for US companies and adverse effects on the broader US economy.
The inception of the Anti-Coercion Instrument followed a notable incident in 2021, when China imposed trade restrictions on Lithuania in response to its diplomatic relations with Taiwan, a territory Beijing claims sovereignty over. The European Commission framed the ACI primarily as a deterrence mechanism. It stresses that the instrument's effectiveness is measured by its preventive power, indicating its preferred use is avoiding activation unless absolutely necessary.
Despite the strategic potential of the ACI, a swift implementation is not feasible. Preliminary estimates suggest it requires a minimum lead time of six months before such measures could take effect once initiated.
To contextualize the stakes involved, EU and US trade in goods and services reached a value of 1.7 trillion euros (approximately 2 trillion US dollars) in 2024, averaging around 4.6 billion euros per day according to Eurostat data. The European Union's principal exports to the United States include pharmaceuticals, automotive vehicles, aircraft, chemicals, medical devices, and alcoholic beverages such as wine and spirits. Conversely, the United States' significant exports to the EU consist of professional and scientific services—which encompass payment processing systems and cloud computing infrastructure—as well as commodities like oil and gas, pharmaceuticals, medical apparatus, aerospace products, and cars.